Why The Theory Of 'Tarnishment' Doesn't Make Sense For Trademark Law

from the nope dept

We've pointed out many times in the past that trademark law really doesn't belong under the same heading as patents and copyrights, even though they're frequently lumped together as "intellectual property." Patents and copyright are from the same clause in the Constitution and, we're told, are supposed to be about "promot[ing] the progress of science and the useful arts." The origin of trademark law, however, comes out of the commerce clause, and was initially designed to be a consumer protection vehicle, to protect consumers from confusion: you wouldn't want to buy Bob's Crappy Cola thinking that it's really Coca Cola. Over the years, however, some lawyers have worked hard to turn trademark from a purely consumer protection play, into something more akin to copyright and patents, granting trademark holders greater and greater rights to limit what others can do. These are more recent variations on trademark law, and unfortunately some of them have snuck their way into the law. That's why you see things like discussion about "dilution" or "tarnishment."

The theories behind such efforts have always seemed quite questionable and, as with these kinds of laws, the effort to put them into the law (and to expand them) are almost always anecdotal, rather than empirical. So you hear plenty of talk about how even if there isn't any consumer confusion, a brand could be "harmed" by dilution or tarnishment. For example, just recently, we had a discussion about Ben & Jerry's ice cream suing a porn company, for creating porn movies that used covers that looked similar to Ben & Jerry's packaging. We noted a complete lack of likelihood of customer confusion, but, as many of our commenters pointed out, the theory in the lawsuit was more focused on tarnishment.

However, for the life of me, I can't see how a brand is "tarnished" if there's no consumer confusion. The two seem intimately linked. If someone knows that it's just some porn company -- and not Ben & Jerry's itself -- making those movies, how would it ever actually harm Ben & Jerry's? No one seems to be able to explain that part.

And, now there's some empirical evidence to suggest that the theory of tarnishment isn't particularly well supported in the real world. The study is one that we already wrote about, Do Bad Things Happen When Works Enter the Public Domain?: Empirical Tests of Copyright Term Extension by Christopher Buccafusco and Paul Heald -- though we focused on the main argument in that paper, that the public domain does not harm works. However, in proving that point, Buccafusco and Heald actually dabble a bit into the question of tarnishment as it pertains to trademarks. That's because they explore whether or not tarnishment is an issue with works in the public domain, and come up with a situation that has close parallels to the trademark realm. And, as I expected, the tarnishment argument has little support. As you may recall, the study looked at audiobooks for works both in the public domain and out of it. But they also compared professional recordings to amateur ones (from Librivox) and looked at how people judged the quality -- but also how that impacted the perceived value of the underlying works. The results are quite informative:

outside of the realm of copyright law, our study might provide support for those who applaud the judiciary’s continuing reluctance to vigorously implement the Federal Trademark Anti-Dilution Act. The tarnishment prong of dilution doctrine asserts that a trademark loses some of its intrinsic value when consumers encounter the mark used in an inappropriate context, such as when the mark is placed on goods of inferior quality. Our data show that listeners to Librivox recordings find the readers to be inferior but do not translate that sentiment to a significantly lower valuation of the associated work. Finally, the doctrine of post-sale confusion in trademark law rests on the assumption that a trademark owner is harmed when a bystander merely observes a trademark on an inferior product (imagine someone who sees a poor quality Chicago Bears sweat shirt without knowing that it’s a knock off). Our data may suggest that the assumption of such a harm is unrealistic.

This seems rather important, and raises significant questions about why we still allow dilution and tarnishment claims under trademark law, when the data continues to suggest little support for the anecdotal reasons behind them. Perhaps it's time to revisit these theories and bring trademark law back in line with its intended purpose: as a consumer protection statute, and not as a tool for brands to shut down things they don't like.

"Our data may suggest that the assumption of such a harm is unrealistic."

When I read this, all I could think of was "too small of a data set". Dilution isn't something that happens because you add one drop of water to a large vat of "special sauce". It comes when there are millions of drops of water being added all the time. No single drop causes enough dilution by itself to show a result, which is what they tried to do here. it's over a long period of time where that dilution happens.

A great way to see how this works is the ongoing trend for Chinese electronics companies to buy up the "trusted" names of American appliance companies that have gone bankrupt, or that were bought up quietly. One of my favorite examples is Zenith, which built up a huge, great reputation over many decades in the US, but is now in fact owned by Lucky Goldstar of Korea (aka, LG). Now LG TVs and such are sold in the US as LG, and also rebadged and branded as Zenith because a fair number of people still have a positive view of this brand and trademark.

Over time, if the products suck, that brand will be diluted and eroded.

Now, if LG didn't protect the name and instead allowed every poor quality piece of electronics in the market to be labeled as Zenith, the brand would be diluted drip by drop, as each consumer got a crappy product that lowered their built up confidence in the brand.

The problem here I think is that narrowly trying to look at the individual effects of each drip is to miss the larger effects of constant dripping.

Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

Agree that sample size matters, but in your LG example, there's actually a risk of customer confusion. If LG stuck the Zenith label on every crappy television, then consumers would have a hard time distinguishing the Zeniths from the bad Zeniths, because they're all made by LG!

The argument is that absent such confusion, tarnishment doesn't matter. Consider obvious knockoff goods. Very often, the knockoffs don't diminish the value of the original but enhance demand for it. If your fake Rolex craps out and you know its fake, you don't blame Rolex. You might, though, say something like, "A real Rolex wouldn't have failed on me."

Not about actual consumer confusion

Famous marks get special legal protection (in part) because they are very valuable and they are very valuable (in part) because they get special legal protection. In other words, there are special laws for the rich. Get used to it already.

In an ethical world, actual consumer confusion would be the only real issue for trademark enforcement -- but in the US, once something is very valuable, it gets political protection.

"I can't see how a brand is "tarnished" if there's no consumer confusion."

Association can create a different kind of 'tarnishing'. Consider the following conversation:
"You want some of my Ben & Jerry's... wink, wink, nudge, nudge, know-what-I-mean?" "Eeew, you're a real pervert; I'll never touch that brand again!"
Of coarse the odds of that becoming a serious connection are pretty small, but my point still stands (no innuendo intended).

Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

However, if the "fake" and the real thing are harder to tell apart (say Zenith TVs), and you are none the wiser as to it's source, would it not tarnish the brand if third party knock offs came with that brand on it?

That is a big ticket item. What would you think if your bottle of pepsi wasn't really Pepsi? What if it was close but not as good? What would happen if Pepsi had no comeback to deal with someone using their mark? Someone flooding the market with nearly the same product can really hurt in the long run, especially if the public is unable to easily tell the poor product from the good one.

What happens if the trademark of Pepsi was suddenly used to promote hookers or whatever, thus diluting the standing in the community?

I always think of Patents, Copyright and Trademarks as these three
1. Patents occur when a work (product) is invented
2. Copyright occurs when a work (product) is created
3. Trademark occurs when the above work needs to be marketed and sold from a unique source

As you can see both Patents and Copyrights actually apply to the actual work in question (the property) whereas trademark is not about the property itself but about how the world sees that work (product) as a marketable good/service. Ie: It's a unique descriptor mark of the trade-able product.

This is also why trademarks lapse as soon as the work (product) is not being commercially sold any more and why trademarks are vigorously defended since if they aren't they can be voided.

To tarnish a trademark you are only tarnishing the marketing ability of that mark and NOT the work itself, and it is a very very subjective thing.

Basically trademarks should not be anywhere near IP laws and instead should be more thought of like a combination of defamation, misrepresentation and interference (with contract) torts. Oh and passing off ;)

Re: Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

Well since Pepsi AFAIK does not have a trademark in the class of Entertainment for example (and prostitution is NOT illegal in lots of countries) then they would have a very very hard time to show dilution unless they can show that people believe that Pepsi the drink manufacturer was promoting Pepsi the Pimp etc and therefore give a likelihood of confusion.

The countries where prostitution is legal would be hard put to find a moron in a hurry that would confuse the too.

Luckily for Pepsi though they are not Coke since Coke would cause LOTS of confusion in this area :)

Re: Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

I think you're mixing up confusion with dilution / tarnishment. Mike's point (and the study authors') are OK with trademark enforcement where there's confusion. They are NOT OK (or less ok) when there is no confusion.

If you can't tell a fake bottle of Pepsi apart from a real one, then that's confusion. Trademark enforcement is appropriate.

But if the issue is Pepsi-branded hookers, almost no one would believe that Pepsi actually endorsed the hookers. The issue is solely about dilution and tarnishment. Here, trademark makes less, if any, sense. Yes, Pepsi might be offended by the hookers. But since no one actually associates the hookers with Pepsi, Pepsi's reputation hasn't actually been harmed. If Pepsi has suffered little to no damage, it's not worth spending resources to enforce Pepsi's trademark in that circumstance.

Marketers want people to talk about their brands, while simultaneously controlling what they say. But you can't have it both ways. You can't own a conversation, because at most, you're only a single party to that.

Taken to its logical extreme, the tarnishment rationale means I can't say that Pepsi is crap. With one sentence, I've tarnished Pepsi's trademark. But if the First Amendment means anything, it means having the right to mentally associate powerful organizations with steaming piles of excrement.

Editorial Correction....

", some lawyers have worked hard to turn trademark from a purely consumer protection play, into something more akin to copyright and ***trademarks*** patents?, granting trademark holders greater and greater rights to limit what others can do."

Re: Re: Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

What about brands that fly a bit closer to the wind. I have seen good looking women promoting Monster energy drinks, I'm sure that some idiot could link a Monster branded hookers to Monster energy drinks. (Please subitute any brand using booth babes for Monster)

The chance of someone actually associateing hookers with a brand must be dependant on the brands image. It's very low for a family orianted brand like Papsi or Disney but higher for GTA (Grand Theft Auto) or UFC.

Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

Good point, but there's something to consider: What if the knock-off brand is better than the original?

There are a great number of studies which measure a consumer's vote of confidence when it comes to price, value, and quality.

I may often quip "consumers are stupid" as they spend money for things while complaining about the companies that serve them, but the truth of the matter is consumers are not stupid.

They're frugal, because they're well adept at knowing an Armani suit will take half their paycheck while a knock-off will cost less but still look good.

I understand B&J's position: despite the consumer's ability to know the difference between the products, there's no disputing consumers will go "Hey, that looks like a B&J ice cream container!", which is something the company most like doesn't want consumers doing.

Not for confusion, but (dare I say it?) respect for the brand.

I love TD, but often times, I feel there are conflicting pieces of advice being thrown out. Branding, to a business, is extremely important. When the brand starts to get "parodied" outside of its expected customer line, harm isn't the issue.

It waters down the brand, and the little tidbit that many people forget is once a brand (trademark) is watered down, it can no longer be called a trademark.

Just ask Coca-cola, who can no longer trademark "coke" because it's now a common word to describe a carbonated drink.

Re: Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

I love the fact that you use the word "parodied" right there. Parody is a protected First Amendment Right, if memory serves. That's why MAD magazine can get away with goofing on shows and movies. Now, I don't care much for Mad, but if they make fun of a movie, and it makes you realize that that movie franchise is indeed terrible, is that dilution?

If harm, isn't the issue, then who cares? If the trademark holder isn't harmed that what they bitchin about?

"Just ask Coca-cola, who can no longer trademark "coke" because it's now a common word to describe a carbonated drink"

Tarnish

I think that the reason why tarnishment is a valid thing is because most consumers say to themselves: "Oh, how could Company X let Company Y use their name so immorally?" without considering for a moment that this is either an unreasonable expectation on Company X, or an unreasonable expectation on everybody else.

It seems to me to be a consumer confusion problem, but one that's been promoted by these big companies.

Re: Tarnish

... consumers say to themselves "Oh, how could Company X let Company Y use their name so immorally?"

They do?
I can't think of an instance where I would think that way.
Can you provide one plausible example where it would appear that consumers have punished one company because of another company's misuse of their brand.

Much more plausible is IP lawyers and marketing firms selling fear and doubt so that they can sell services to corporate customers.

Re: Re: Re: Response to: Anonymous Coward on Oct 16th, 2012 @ 8:22pm

You could easily argue that the marketers of "coke" should be celebrating that achievement - "We're so dominant that even when people are talking about our competitors, they're still using our name. We're always in their thoughts."

And of course that's another example where there could be "consumer confusion".

Don't marketers get paid to increase "mindshare" ? So isn't almost any use of the brand name a good thing ? Granted, "there's no such thing as bad publicity" isn't always true, but it's still true more often than not.

Delusion or Dilution

If it's "coke" as in coca cola or coke as in cocaine, even though coca cola used to have cocaine in it, everyone now knows that it doesn't and coke is still a respected brand.
If someone were to use the Coke brand to promote cocaine and hookers,(the pause that refreshes)the average Joe would know the difference and not be deluded into thinking that the brand was diluted. The brand would not be tarnished but quite possibly enhanced.

"If someone knows that it's just some porn company -- and not Ben & Jerry's itself -- making those movies, how would it ever actually harm Ben & Jerry's? No one seems to be able to explain that part."

Did you actually read the comments to the story? I there were multiple explanations of that part.

I think dilution law is mostly lame, but I don't think it's hard to imagine (a) that a mental association can be made without confusion, and (b) how an association with unsavory material can harm the party associated.

Re: Ownership vs. Conversation

I totally agree.

You need trademark because otherwise someone could put vinigar in an aluminum can and put the Pepsi logo on, and the consumer wouldn't know unless they read the ingredients list or actually opened the can.

What we do NOT need trademark for is "hey, a can of Pepsi is visible in your porn flick, that degenerates our brand."

I'll even grant that in some cases it MIGHT tarnish the brand. I don't care. Sometimes other people do things that make your property less valuable. A home's value might go down if the nearby forest is cut down to make room for development - but the developers most certainly do NOT have to compensate you for the reduced value of your home. Or if a ratings company says a stock is overvalued, and that causes the price to drop. Even if you can prove that the comment directly caused the price drop, there's nothing you can do about it. They have every right to voice their opinion.

Similarily, if I want to make a movie that associates something with Pepsi, I should have every right to do so.

Re:

that's the problem, here, this ad man's idea that all people are thinking about, like them, is the 'value' of the 'brand' - most people, in my experience, don't give a flying fuck about the 'brand'

if there was offensive pornography parodying the Ben and Jerry logo, most normal people would choose to avoid the porn they find offensive, maybe even becoming annoyed that a porn company tried to hijack something they enjoy to trick them into viewing the porn.

companies react like their customers are basically morons who can't even tell daylight from darkness - this idea of the brand 'experience' is far more in the fevered imaginings of 'brand managers' charging for consultancy than any reaction anyone I know has to such nonsense.

ultimately, those same feelings of catching someone attempting to manipulate sentiment prevail

The word 'theory'

I am going to get all grumpy here and bemoan the sloppy use of the word 'theory'. The denigration of this word from a precise scientific term to pretty much equating it with a notion has contributed enormously to scientific ignorance in America and the rejection of evolution and climate change and vaccines.